FEDS DELAY THREAT TO WITHHOLD TRANSIT
FUNDING

After threatening to halt up to $1.6 billion in grants for transit agencies in California starting Friday — including $29 million for the San Diego region — the federal government has postponed such action amid negotiations over a pension dispute.

The conflict is rooted in the cost-cutting that Gov. Jerry Brown secured to help rein in spiraling pension liabilities. Under a new law, state workers began paying more into their pensions after Jan. 1. Newly hired employees also will collect less and wait longer for their retirement benefits.

Employee unions, transit agencies, the U.S. Labor Department and the Brown administration have been locked in discussions about whether the new statute runs afoul of worker protections contained in the Federal Transit Act of 1970. The act requires the labor department to uphold collective-bargaining rights, using transit dollars as leverage.

That requirement stems from another federal measure signed nearly 50 years ago by President Lyndon Johnson. The Urban Mass Transportation Act of 1964 tied money for public transit to the condition that transit agencies preserve workers’ collective-bargaining rights.

No near-term bus or rail service reductions are expected in San Diego County as the federal-state fight plays out. But paying for capital projects, including the replacement of old buses and upgrades to transit maintenance yards, could eventually get tougher if federal funds are delayed, local officials said.

“We’re gratified that the U.S. Department of Labor has agreed to hold off on deciding whether federal transportation grants can flow to California transit districts,” Jim Brown, a spokesman for the governor, said in an email Friday.

A Labor Department spokesman said the federal agency “is working closely with the Governor’s Office to resolve the issues,” and that no freezing of funds would occur while those talks continue.

Statewide impact

A cutoff of federal funds would affect 83 transit agencies in California. There are 99 grants totaling $1.1 billion being developed, along with an unspecified number totaling $530 million awaiting certification.

The San Diego Association of Governments — the transportation planning agency for San Diego County — pegged the total amount of potentially affected funding for this region at $29 million.

The stakes in the transit standoff are much higher to the north, where the Los Angeles County Metropolitan Transportation Authority stands to lose $300 million. Agencies in Orange County and the Sacramento area also stand to see large sums withheld.

If the controversy drags out, transit agencies said the bill could approach $4 billion statewide through the next federal fiscal year.

Joshua Shaw, executive director for the California Transit Association, has expressed optimism this week that negotiations have shown progress and that a solution is reachable. Neither he nor any other officials involved in the situation have said what the solution might entail.

On Wednesday, amid the Labor Department’s looming cutoff, Moody’s Investors Service put 15 transit agencies in California “under review for (credit) downgrade” — including the San Diego Metropolitan Transit System and the North County Transit District.

“The rating action is prompted by the possibility that the agencies will lose federal grants that on average comprise about 13 percent of their operating revenue and 40 percent of their capital funding,” the service said.